Debt and Financing Lease Liabilities
|12 Months Ended|
Dec. 31, 2022
|Debt Disclosure [Abstract]|
|Debt and Financing Lease Liabilities||DEBT AND FINANCING LEASE LIABILITIES
Long-term debt was comprised of the following:
The following table presents the aggregate maturities of long-term debt and financing leases as of December 31, 2022:
Senior Secured Credit Facility - Revolver and Term Loans
In March 2022, we entered into the fifth amended and restated senior secured credit facility with five banks, which included the following amendments:
•increased the aggregate amount of total commitments from $245,000 to $495,000,
•increased the aggregate amount of the revolving commitments from $180,000 to $200,000,
•increased the existing term loan A from $65,000 to $75,000,
•extended the maturity date of the revolving commitment and term loan A from June 28, 2024 to March 4, 2025,
•added a delayed draw term loan A for up to $220,000 through a September 4, 2023 maturity date,
•increased the total funded debt to EBITDA covenant ratio from a maximum of 3.50 to 4.50 for the quarter ended March 31, 2022; 4.25 for the quarter ending June 30, 2022, 4.00 for the quarters ending September 30, 2022 and December 31, 2022; and 3.50 thereafter,
•specified the debt service coverage ratio (the ratio of (a) cash flow of the core Ameresco companies, to (b) debt service of the core Ameresco companies as of the end of each fiscal quarter) to be less than 1.5, and
•increased our limit under an energy conversation project financing to $650,000, which provides us with flexibility to grow our federal business further.
We accounted for this amendment as a modification and at closing we incurred $2,048 in lenders fees which were reflected as debt discount and $352 in third party fees which were reflected as debt issuance costs. The unamortized debt discount and issuance costs of the previous agreement are being amortized over the remaining term of the amended agreement, with the exception of $96 of costs relating to a previous syndicated lender which did not participate in this amendment. These costs were expensed in other expenses, net during the year ended December 31, 2022.
In June 2022, we entered into the first amendment to the fifth amended and restated senior secured credit facility, which increased the maximum indebtedness incurred under an energy conservation project financing from $650,000 to $725,000 from and after April 1, 2022, to and including December 30, 2022. As of December 31, 2022, the maximum indebtedness incurred under an energy conservation project financing reverted back to $650,000.
The revolving credit facility may be increased up to an additional $100,000 in increments of at least $25,000 at the approval of lenders, subject to certain conditions. Up to $20,000 of the revolving credit facility may be borrowed in Canadian dollars, Euros, or pounds sterling. We are the sole borrower under the credit facility. The obligations under the credit facility are guaranteed by certain of our direct and indirect wholly owned domestic subsidiaries and are secured by a pledge of all of Ameresco’s and such subsidiary guarantors’ assets, other than the equity interests of certain subsidiaries and assets held in non-core subsidiaries (as defined in the agreement).
The table below sets forth amounts outstanding under the credit facility, net of unamortized debt discounts and debt issuance costs:
As of December 31, 2022, funds of $345 were available for borrowing under the revolving credit facility and we had $16,755 in letters of credit outstanding. We expect to use the remaining funds available under the credit facility for general corporate purposes, including permitted acquisitions, refinancing of existing indebtedness and working capital.
The interest rate for borrowings under the credit facility is based on (i) each term loan shall bear interest at the term SOFR for such interest period plus the applicable rate for such facility; (ii) each base rate loan shall bear interest at a rate per annum equal to the base rate plus the applicable rate; (iii) each alternative currency daily rate loan shall bear at a rate per annum equal to the alternative currency daily rate plus the applicable rate; (iv) each alternative currency term rate loan shall bear interest at a rate per annum equal to the alternative currency term rate for such interest period plus the applicable rate; and (v) each swingline loan shall bear interest at a rate per annum equal to the base rate plus the applicable rate.
The revolving credit facility does not require amortization of principal. The term loan requires quarterly principal payments of $1,250 beginning in the first quarter of 2024, with the balance due at maturity. All borrowings may be paid before maturity in whole or in part at our option without penalty or premium, other than reimbursement of any breakage and deployment costs in the case of LIBOR borrowings.
The credit facility limits Ameresco’s and our subsidiaries’ ability to, among other things: incur additional indebtedness; incur liens or guarantee obligations; merge, liquidate or dispose of assets; make acquisitions or other investments; enter into hedging agreements; pay dividends and make other distributions and engage in transactions with affiliates, except in the ordinary course of business on an arms’ length basis.
Under the credit facility, Ameresco and our core domestic subsidiaries may not invest cash or property in, or loan to, our non-core subsidiaries in aggregate amounts exceeding 49% of our consolidated stockholders’ equity. In addition, we and our core subsidiaries must maintain a ratio of total funded debt to EBITDA as noted above, and a debt service coverage ratio (as defined in the agreement) of at least 1.5 to 1.0.
Any failure to comply with the financial or other covenants of the credit facility would not only prevent us from being able to borrow additional funds, but would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility, to terminate the credit facility, and enforce liens against the collateral.
The credit facility also includes several other customary events of default, including a change in control of Ameresco, permitting the lenders to accelerate the indebtedness, terminate the credit facility, and enforce liens against the collateral.
For purposes of our senior secured facility, EBITDA, as defined, excludes the results of certain renewable energy projects that we own and for which financing from others remains outstanding; total funded debt, as defined, includes amounts outstanding under both the term loan and revolver portions of the senior secured credit facility plus other indebtedness, but excludes non-recourse indebtedness of project company subsidiaries; and debt service, as defined, includes principal and interest payments on the indebtedness included in total funded debt other than principal payments on the revolver portion of the facility.
Non-recourse Fixed Rate Note, 6.50%, due October 2037
In October 2022, one of our subsidiaries entered into a loan agreement with a new lender under a non-recourse credit facility, refinancing a previous non-recourse credit facility originally signed on October 23, 2020, which was scheduled to expire March 31, 2026.
The new loan is scheduled to mature on October 26, 2037, provides a principal amount of up to $125,000 and bears interest at a rate of 6.50% with a residual percentage of distributable cash flows payable after the maturity date of the loan, until the earlier of the lender achieving an 8.25% “IRR” on funds borrowed under the facility, or the facility discharge date on October 26, 2047. The principal and interest payments are due in quarterly installments based on an 5-year amortization schedule with the principal payments being adjusted based on the distributable cash flows from the three renewable natural gas projects owned and operated by the project companies. No up-front, commitment or structuring fees were payable on the credit facility. The obligations under the loan are guaranteed by all the related subsidiaries and are secured by the subsidiaries’ assets as well as our equity interest in the signing subsidiary. Borrowings under the credit facility are otherwise non-recourse to Ameresco.
At the closing, we drew down $80,000 under this facility, approximately $26,530 of which was used to repay all amounts outstanding under the prior loan and the remainder was used to terminate swap obligations, pay transaction costs, make permitted distributions to Ameresco and for the project companies’ working capital needs. Unamortized debt discount fees of $528 and debt issuance costs of $35 related to the prior loan were expensed in other expenses, net during the year ended December 31, 2022. In addition, we terminated an interest rate swap and a commodity swap related to the prior loan before their maturity dates. These swap terminations resulted in a settlement gain on undesignated derivatives of $694.
The new facility allows two additional draws, subject to certain conditions, up to the remaining principal amount, to be used to make distributions to Ameresco. On December 21, 2022, we drew down an additional $15,000 under this facility. As of December 31, 2022, $91,698 was outstanding under this facility, net of unamortized debt discount and issuance costs of $505.
Non-recourse Fixed Rate Note, 3.25%, due March 2046, Variable Rate Term Loan, 7.27%, due July 2030, and Fixed Rate Note, 5.45%, due March 31, 2042
In July 2021, we entered into a $44,748 non-recourse debt agreement with a group of lenders. The financing facility consists of gross proceeds of $40,683 in senior secured first lien term notes due March 2046 (“Senior Notes”), gross proceeds of $4,065 in floating rate senior secured second lien term notes due July 2030 (“Second Lien Notes”), and a shelf facility of up to $60,000 available until July 2024. The lenders, in their sole discretion, have the right to approve or deny our funding requests.
In June 2022, two senior secured notes (“Shelf Notes”) due March 31, 2042 were issued under our shelf facility, with gross proceeds of $7,113. The Shelf Notes bear interest at a fixed rate of 5.45% per annum and are payable quarterly commencing September 30, 2022.
The Senior Notes bear interest at a fixed rate of 3.25% per annum, are payable quarterly commencing September 30, 2021, and require that the project’s debt service coverage ratio for both the historical 12-month and projected 12-month periods at each payment date equal or exceed 1.2 to 1.0.
The Second Lien Notes bear a floating rate equal to the applicable SOFR plus 3.50% from July 27, 2021 to July 26, 2025 and on July 27, 2025 the rate increases to the applicable SOFR plus 3.75%. The Second Lien Notes are payable on each quarterly payment date commencing September 30, 2021, as specified in the debt agreement.
The agreement also requires us to maintain six months of scheduled payments of principal and interest as the minimum debt service reserve and to make additional principal prepayments based on project cash flows and certain other conditions through the earlier of maturity or when the principal balance is paid in full.
At closing, we incurred $103 in lender fees and debt issuance costs on the Shelf Notes. In connection with the Senior Notes, we recorded a derivative instrument for make-whole provisions with an initial value of $1,088, which was recorded as a debt discount. See Note 19 for additional information. The aggregate balance of the Senior Notes, and Second Lien Notes as of December 31, 2022 was $40,645, net of unamortized debt discount and issuance costs.
Non-recourse Construction Revolvers
June 2020 Construction Revolver, 5.68%, due June 2023
In June 2020, we entered into a revolving credit agreement with a bank, with an aggregate borrowing capacity of $100,000 for use in financing the construction cost of our owned projects.
We enter into amendments to our June 2020 construction revolver from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2022, we entered into amendments to extend this revolver and the current maturity date is June 2023. All remaining unpaid amounts outstanding under the facility are due at that time. In December 2022, we entered into an amended and restated master construction loan agreement. which modified the reference rate from LIBOR to SOFR as a result of the expected cessation of LIBOR. Per the amendment, this instrument will bear interest at the applicable term SOFR rate plus an applicable margin of 1.61%.
During the year ended December 31, 2022, we drew down $29,204 under this revolver. As of December 31, 2022, $39,536 was outstanding and $60,464 was available for borrowing.
July 2020 Construction Revolver, 5.92%, due June 2023
We enter into amendments to our July 2020 construction revolver from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2022, we entered into amendments to extend this revolver and the current maturity date is January 31, 2023. In January 2023, we signed an amendment which extended the maturity dates on two projects to June 2023, extended the maturity date of the loan agreement until July 2023, and reduced the revolving loan commitment to $5,855.
No definition available.
The entire disclosure for long-term debt.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef